The four-letter "F word"

Small businesses never saw this coming

After a million-dollar renovation next to the Sequim Bay Lodge, 14 Below Ice Cream Co. & Cafe is moving. While the response to their ice cream, lunch, and dinner service was overwhelmingly positive, they have faced three and a half years of challenges. Guest comments include:

• “The construction is a mess to get through to your entrance.”

• “We can’t see your entrance from the roadside.”

• “The construction makes the current turn-in too dangerous.”

There were other factors, too. According to a Facebook post, the proprietors were surprised when the County would not reissue the eatery’s food services permit a day before a 40-guest event. The owners wrote that they were “disappointed by the county’s determination, since we have been operating for over 1.5 years at this location. It completely upended many of your dinner plans on Thursday, cost us hours and money, and was truly an unfortunate and avoidable situation for sure.”

The owners also cited a breach of contract with the Sequim Bay Lodge Hotel. “Even though we waited on the county for months to show up, this breach now prevents the county from moving forward with their inspection due to litigation.”

Unfortunately, the restaurant is situated near an unnamed tributary that passes under Highway 101 and drains into Sequim Bay. That culvert was identified as a fish passage barrier and is part of a federal court order won by the Northwest Treaty Tribes, including the Jamestown Tribe, in U.S. v. Washington, which mandates the replacement of fish-blocking culverts under state highways.

The construction, constant heavy machinery noise, and dust resulted in a substantial decrease in business for 14 Below. However, patrons seeking dining options east of Sequim could travel just 2.4 miles further to the next closest option, an establishment with far more variety.

The Seven Cedars Casino has a bourbon bar, coffee shop, pizzeria, cafe, and sit-down dining. Since the Casino is on sovereign land, County food service permitting issues don’t apply.

14 Below plans to reopen at 111 West Bell Street in Sequim, the former location of Galare Thai. “We hope the approval process does not drag on too long (weeks, not months), since this location, even today, still has a fully functioning, and approved restaurant that was operating just a few months ago,” they announced on Facebook.

According to their last post, 14 Below ceased operations on October 3rd. The owners have not announced a reopening.

State business blues (and browns)

Some of our bravest neighbors in the community identify a need and choose to fill it. Sometimes, they risk everything to accomplish this goal — money is borrowed from parents, and second mortgages are taken out in hopes that a new venture will be lucrative. There is often no safety net, and it’s a “make it or break it” leap of faith. Starting a small business is not for the faint of heart.

A map from the Center for American Progress shows business growth across the Country — the greener, the better. Washington State has seen negative growth over the past four years and stands out as a brown smudge surrounded by a sea of green prosperity. During 2019-2023, Clallam County saw a decrease of 131 businesses.

It’s not just economic conditions that make things tough here. Sometimes, small businesses, which generate a significant portion of our tax revenue, are targeted by the very governments they sustain.

That’s a city way to treat a business

The Port Angeles City Council recently announced that businesses must purchase a $190 annual license. In a calculation that suggests inefficiency, the City estimates half that fee, $95, will be spent to process each application. The Peninsula Daily News interviewed Deputy Mayor Navarra Carr, who said, “Now, everyone is going to have to pay their fair share.”

Nonprofits, such as Peninsula Behavioral Health, whose CEO receives a quarter million dollars a year in compensation, will be exempt from the requirement. So will “micro-small businesses.” The industry generally defines micro-small businesses as those generating under $250,000 annually. However, Port Angeles leaders define micro-small businesses as generating less than $25,000 annually. What businesses in Port Angeles make an average of less than $70 per day?

The $190 annual license is an outlier on the Peninsula: Forks doesn’t have one, Sequim’s is $56, and Port Townsend’s is $75. If the license doesn’t serve the business community or the City as intended, Port Angeles Mayor Kate Dexter says the council can “fiddle with things as we go.”

County constraints

Replacing smashed windows and removing graffiti can add thousands in costs to a business’s bottom line. However, former Port Angeles City Councilmember and current Clallam County Commissioner Mike French has condoned property destruction. French posted online that “property destruction is not only fine, it’s usually the only way we’ve ever seen actual change happen, accompanied with strikes.”

Disdain for small businesses isn’t limited to just one board member at the County level. When Commissioner Ozias learned of one family’s vision to reopen their dormant gravel pit next to his home, he used his elected position to covertly circumvent due process.

County Commissioner Ozias wrote a letter to the county stating that the gravel pit would cause health impacts “ranging from high blood pressure to speech and hearing problems to sleep disruption.” His campaign’s top donor, the Jamestown Tribe, also sent a letter. It didn’t explicitly ask for the gravel pit to remain closed, but the Tribe requested that several additional restrictions be imposed, making it nearly impossible to operate at a profit.

After receiving death threats and having their home shot at, the local family chose not to reopen the gravel pit. Four family-wage jobs and a small business vaporized before the company could gain a foothold in Clallam County.

When closing Towne Road was being considered, a local dairy owner wrote the commissioners to explain the closure’s impact on his family business. “There is less cost associated [with] delivery and distribution where we have the factor of wear and tear on vehicles, insurance, wages, fuel, and other miscellaneous expenses,” wrote Dungeness Valley Creamery owner Ryan McCarthy. “This leads to higher margins for these particular sales, which we rely on for our operations and success of our business.”

McCarthy worried that dead-ending the road may block access for hundreds of existing and potential dairy customers who wouldn’t be willing to detour 5 miles. Closing the road would limit the community's visibility to the business which was experiencing growth at the time.

“I feel that the agri-tourism aspect of our business and close proximity to neighboring farms has been a large part of our continued success and is one of the pillars our business is built on,” wrote McCarthy. "We have a known brand and product, which is often associated with an experience of seeing or visiting the farm, even if it’s just passing by on occasion, or a regular basis.”

Disregarding its impact on the local farmer’s family, Commissioner Ozias and the Jamestown Tribe fought and succeeded in keeping Towne Road closed for over two years.

As if operating in an economically depressed region wasn’t challenging enough, small businesses in Clallam County risk dissatisfying politicians and being targeted by the Jamestown Tribe.

Hard work, high risk

Construction and excavating companies adapt to changing trends and conditions. During building booms, they struggle to keep up with housing demands. As infrastructure ages, they replace septic systems and bridge abutments. When rains and wind pummel our County, they respond by clearing debris and digging out mud-submerged highways. But it’s not cheap running a business with big equipment in the State of Washington:

• License and tonnage fees can be over $4,000 per vehicle per year.

• Personal property tax, a tax on things like machinery, equipment, and furniture, must be paid to the State. For example, if a company buys a truck, it pays sales tax. However, if a boom lift is later attached to the truck, the company must claim that add-on as personal property and pay a tax. Not claiming this equipment can lead to repercussions during an audit.

• Business and Occupation (B&O) tax in Washington State varies from 0.47% to 1.5% of a company’s gross receipts, depending on its business activities.

• Property taxes for company headquarters can be thousands annually.

• Some trucks and equipment can consume more than 100 gallons of fuel daily.

• County inspections and building permits must be paid for.

• When a Washington State company takes overweight or over-width equipment on the road, it must purchase a trip permit. That cost is based on the estimated scale weight of the equipment, the number of axles, and the highway mileage traveled. One-day permits begin at $50 before mileage is calculated.

Companies pay fair wages and provide benefits to keep employees satisfied. Businesses pay taxes and fees to fund essential services and keep roads safe, but doing business has become more complex in our State.

In our County, companies with heavy equipment can pinpoint exactly when things began to change — 28 years ago, a competitor arrived that didn’t have to pay for many of the items mentioned above.

In 1996 the Jamestown Tribe founded Jamestown Excavating. What began with three laborers focused primarily on tribal projects has swelled to a corporation that grew its workforce by 40% last year alone and now has 23 employees (according to the Tribe’s 2023 Report to Tribal Citizens.) The company continues to work on tribal projects but is increasingly venturing into the private and public sectors:

• The $3.1 million Heart O’ the Hills campground renovation, a National Park Service project in Port Angeles, was managed by a “woman and Native American-owned small business based in Yakima.” They selected Jamestown Excavating to do much of their subcontracting.

• Public projects contracted with Jamestown Excavating include the Fiero Marine Life Center, a Port Angeles middle school, and the Field Hall & Arts Center.

• Jamestown Excavating was just awarded a contract for the new Amazon Distribution Center in Port Angeles, estimated to be between $2.8 and $3 million.

The State’s Labor & Industries website lists public works projects for prospective bidders. A search for “Jamestown Excavating” shows that the corporation has been awarded millions in taxpayer-funded road realignments, water main replacements, and traffic calming projects.

They were even awarded the $36,000 bid to install a cell phone tower in Blyn. Commissioner Ozias’ nonprofit organization, the North Olympic Development Council (NODC), determined that a tower was necessary in its “Natural Disaster Resiliency Report,” which aimed to influence county policy and spending. The Jamestown Tribe, which funded 53% of Commissioner Ozias’ last campaign, was awarded work that Ozias’ nonprofit deemed was needed.

In business terms, that’s called a “return on investment.”

Some of Jamestown Excavating’s advantages come from its classifications as a “Disadvantaged” and “Minority” business. Although the Jamestown Tribe had over $70 million in revenue last year and has 217 tribal members residing locally, it qualifies as an enterprise owned by “socially and economically disadvantaged persons.” With that designation, it can receive preferential treatment when competing for government contracts.

Another advantage that Jamestown Excavating has over its competitors is that it doesn’t have to pay workers' comp insurance.

Normally, a business registered in Washington State must pay into Workers Comp insurance in case employees are injured, but Jamestown Excavating isn’t a Washington State business. According to the Secretary of State, it’s a “foreign profit corporation.”

As a foreign business, the company’s license plates read “XMT,” meaning they are exempt from buying tabs and paying license and tonnage fees. Tribal vehicles are generally exempt from passing through weigh stations in Washington State. This exemption is part of the broader recognition of tribal sovereignty and their special legal status. State weigh stations not only weigh vehicles to ensure our highways aren’t damaged, but state employees perform safety inspections that keep other drivers safe.

According to the Washington State Department of Revenue, “Federal law provides that the sales of tangible goods, including motor vehicles, to tribes and enrolled tribal members are exempt from retail sales tax if the goods are delivered to or the sale is made in the tribe or enrolled tribal member’s Indian country.”

If Jamestown Excavating takes delivery of a brand new $500,000 Kenworth truck and trailer on sovereign land, the company doesn’t have to pay sales tax. New vehicles can be signed over in the casino or golf course parking lot, and the company gets a $50,000 discount that their competitors aren’t allowed.

A corporation that doesn’t pay taxes is competing against small businesses required to pay taxes. The corporation is being awarded jobs funded by taxpayer money generated by the very businesses the corporation is suppressing.

Last year, Jamestown Excavating installed solar panels on its building. Taxpayer-funded grants paid for it.

Photo courtesy Jamestown’s 2023 Report to Tribal Citizens.

This week, another parcel was acquired in tribal trust land. A Carlsborg property, the Tribe's Economic Development Authority (EDA) Schwan building, was purchased three years ago and also recently had taxpayer-funded solar panels installed. With this acquisition, $4,356.24 will be erased from the property tax rolls, further defunding our struggling hospitals, schools, fire districts, and libraries.

Courtesy of the Peninsula Daily News.

Unfair advantage

One common struggle many area businesses are experiencing is “finding people.” Small businesses may be able to pay the same hourly rate as the Jamestown Tribe, but the benefits, including paid federal and tribal holidays, are impossible to compete with. Where a small business may be able to provide health insurance for the individual, the Jamestown Tribe can provide benefits for the entire family.

The County’s second-largest employer is competing in more than just the excavation, casino, hotel, and golf markets; it now has a cannabis dispensary, art gallery, concrete business, land surveying company, self-storage facility, and is a broadband internet provider.

The developers of Seabrook are moving forward with their plans to develop a neighborhood on Sequim Bay. When the local family hoped to reopen the gravel pit next to Commissioner Ozias’ primary residence, the Tribe wrote a letter to the County with concerns about its negative impact on a small, seasonally dry tributary to Johnson Creek. They cited elk migration, noise, light pollution, and treaty rights as reasons to restrict operations. However, the Tribe hasn’t objected to the Seabrook development that would sandwich salmon-bearing Johnson Creek with 600 homes.

During a recent presentation about the development, which the Tribe hosted at the Seven Cedars Casino, Seabrook developers thanked the Tribe for letting them stay in their hotel and complimented the several dining and entertainment options provided to them. If Seabrook develops the 160-acre parcel on Sequim Bay and needs contractors, the Jamestown Tribe could utilize their business advantage and underbid other local companies to survey the land, grade the property, build the roads, pour concrete sidewalks, dig trenches, and install internet.

Businesses say it’s impossible to fairly compete against a monopoly that isn’t required to pay taxes; they can only hope there will always be enough work to go around.

Consider a local family-owned gas station required to collect and remit the State’s .49-cent per gallon gas tax. In Washington State, tribes operating fuel stations on their reservations have a special agreement regarding the state gas tax. Under this agreement, tribal fuel stations collect the full state gas tax (.49 cents per gallon), but the state then refunds them 75% of the collected tax (.37 cents per gallon). In other words, tribes remit the full gas tax but receive a refund of 75%.

For a gas station as big as the Tribe’s “Longhouse Market and Deli,” it’s not uncommon to sell 400,000 gallons of fuel every month. If the Tribe keeps .37 cents for every gallon sold, that’s approximately $148,000 each month that the Tribe can pocket — an amount that could be a competitor’s fuel profit for the entire year.

The Jamestown Tribe is planning a full-service truck stop and fueling facility at the intersection of Highway 101 and Diamond Point Road.

For generations, folks living on the remote Olympic Peninsula, 100 miles from the nearest interstate, could rely on skill, tenacity, and determination to make a living. Success once awaited those who were unafraid of hard work and risk-taking. Now, entrepreneurs are pitted against a competitor who can underbid them and lure employees away. The competition has the backing of a multimillion-dollar corporation thriving largely on taxpayer-sourced grant funding. It’s an unlevel playing field, for sure.

There’s a four-letter “F word” that isn’t being talked about in Clallam County.

“Fair.”

Humane Society Meeting

The distressed Olympic Peninsula Humane Society has posted details for a public meeting on their Facebook page.

“The Olympic Peninsula Humane Society’s efforts to bring Bark House back online are moving forward! Board members and staff have developed a working plan that lays out the steps necessary to make the facility safer for workers and more healthful and supportive for the dogs in our care.

To make sure we’re on-track, we will be holding a public forum focused on this Bark House reopening plan. The meeting will occur on Wednesday, November 13, 2024, at the Moose Lodge (809 S Pine St, Port Angeles, WA 98362) from 6-8pm. We want to hear what you think. So please join us on the 13th!”